Goldman Sachsreported first-quarter earnings before the opening bell on Wednesday.
Here are the numbers:
- Earnings: Goldman Sachs Q1 EPS $18.60 vs. $3.11 a year ago; FactSet EPS consensus $10.22, expected by analysts polled by Refinitiv.
- Revenue:$17.7 billion, vs. $12.6 billion expected.
- Provision for credit losses was a net benefit of $70 million for the first quarter of 2021,compared with net provisions of $937 million for the first quarter of 2020 and $293million for the fourth quarter of 2020. The first quarter of 2021 included reserve reductions on wholesale and consumer loans reflecting continued improvement in the broader economic environment following challenging conditions that began in the first quarter of 2020 as a result of the COVID-19 pandemic, partially offset by portfolio growth, including provisions related to the pending acquisition of the General Motors co-branded credit card portfolio.
- The firm’s allowance for credit losses was $4.24 billion as of March 31, 2021.
Goldman Sachs rose more than 1% in premarket trading.
Expectations for Goldman Sachs are running high amid favorable conditions for many of the Wall Street businesses that the firm operates.
Analysts expect revenue growth to be driven by surging investment banking fees, helped in part by the record first-quarter issuance of blank check companies known as SPACs. Trading desks may also post higher revenue than a year earlier, and buoyant markets bode well for asset management fees.
Of the six biggest U.S. banks, Goldman gets the biggest share of its revenue from Wall Street activities including trading and investment banking. For the past few years that has been a detriment to the firm, as retail banking fueled by cheap consumer deposits has driven the industry’s record profits.
That dynamic reversed during the coronavirus pandemic, when firms with sizeable consumer operations had to set aside tens of billions of dollars for anticipated loan losses, causing banks like Wells Fargo to post their first quarterly loss since the financial crisis.
Goldman shares have climbed 24% this year, roughly matching the gain of the KBW Bank Index.
Finacial Summary
Highlights
- The firm’s results reflected record quarterly net revenues of $17.70 billion, more than double the amount in the first quarter of 2020, record quarterly net earnings of $6.84 billion and record quarterly diluted EPS of $18.60. Annualized ROE1 of 31.0% was the highest quarterly ROE since 2009.
- Investment Banking generated record quarterly net revenues of $3.77 billion, including record Equity underwriting net revenues and strong net revenues in Financial advisory and Debt underwriting. The backlog2 ended the quarter at a record level.
- The firm retained its #1 rankings in worldwide announced and completed mergers and acquisitions, worldwide equity and equity-related offerings and common stock offerings for the year-to-date3.
- Global Markets generated quarterly net revenues of $7.58 billion, 47% higher than the first quarter of 2020, and its highest quarterly net revenues since 2010, reflecting the second highest quarterly net revenues in Equities and strong net revenues in Fixed Income, Currency and Commodities (FICC).
- Asset Management generated record quarterly net revenues of $4.61 billion, reflecting record net revenues from Equity investments.
- Consumer & Wealth Management generated record quarterly net revenues of $1.74 billion, reflecting continued growth in both Wealthmanagement and Consumer banking net revenues.
- Firmwide assets under supervision2,4 increased $59 billion during the quarter, including long-term net inflows of $37 billion, to a record $2.20 trillion. Firmwide Management and other fees were $1.77 billion for the first quarter of 2021.
- Book value per common share increased by 6.2% during the quarter to $250.81.
- The firm returned $3.15 billion of capital to common shareholders during the quarter, including $2.70 billion of share repurchases and $448 million of common stock dividends.
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